INTRODUCTION TO E-BUSINESS AND E-

COMMERCE

IIT 2203  E-BUSINESS 

 HISTORY OF E-BUSINESS

How it started

 Electronic data interchange (EDI) - electronically transfer

routine documents (application enlarged pool of participating
companies to include manufacturers, retailers, services)

 1970s: innovations like electronic funds transfer (EFT) - funds

routed electronically from one organization to another
(limited to large corporations)

 1990s: the Internet commercialized and users flocked to

participate in the form of dot-coms, or Internet start-ups
 HISTORY OF E-BUSINESS CONT’D

 1997: Introduction of a brand new phrase – e-business

 1999: The emphasis of e-business shifted from B2C to B2B

 2001: The emphasis shifted from B2B to B2E, c-commerce, e-

government, e-learning, and m-commerce

 2004: Total online shopping and transactions in the United

States between $3 to $7 trillion

 E-business will undoubtedly continue to shift and change

PHASES OF E-BUSINESS DEVELOPMENT
 BUSINESS

 Business is also known as an enterprise or a firm, is

an organization involved in the trade of goods, services, or
both to consumers
 Business can be categorized a purely physical aka brick and
mortar organisations
 All other businesses that include a mixture of digital and
physical dimensions fall under EC.
 E COMMERCE DEFINITION

 Describes the process of buying ,selling , transferring ,or

exchanging Products services or information via computer
networks
 It involves digitally enabled commercial transactions between
and among organisations and individuals.
 Buying and selling over the internet .
 Refers primarily to the digital enabling of transactions and
processes within a firm ,involving IS under the control of the
firm.
 E-BUSINESS

 Refers to a broader definition of EC ,not just the buying and

selling of goods and services , but also servicing
customers ,collaborating with business partners , conducting e-
learning ,and conducting electronic transactions within an
organisation.
 a term used to describe businesses run on the Internet, or
utilizing Internet technologies to improve the productivity or
profitability of a business.
 e-business is the use of ICT to improve business (from the use of
email to facilitate administrative procedures to buying and
selling through the Internet).
 Electronic business = EC + Internal Electronic Transactions
E B CNT’D
DIFFERENCE BETWEEN E-BUSINESS AND
E-COMMERCE CONT’D
 E-MARKETING, E-COMMERCE AND E-
OPERATIONS
 E-marketing: Building an online presence, showcasing a
company, and providing detailed information. (The majority of
small businesses on the Internet today are actively doing e-
marketing.)
 E-commerce: Selling products and services online, conducting
payment, handling transaction details, and supporting
automated customer inquiries.
 E-operations: Streamlining of business processes and steps to
enhance business efficiencies between functional
departments of a company. (This also includes streamlining
the supply chain between your company and key suppliers.)
 TOOLS FOR E-BUSINESS

 Mobile phones
 Personal Digital Assistants(PDAs)
 Electronic data interchange
 File transfer
 Facsimile
 Video conferencing, internet, intranets and extranets
EXAMPLES OF ACTIVITIES CARRIED OUT
ELECTRONICALLY:
 Recruiting employees
 Marketing, advertising and public relations
 Customer support and education
 Training of employees
 Meetings and resource sharing among employees
 Payroll and benefits management
 E-BUSINESS VS TRADITIONAL
BUSINESS

‘Traditional’: ‘E-Business’:

Characteristics of an “Electronic Business

journey”:
Traditional business organization
‘develop step by step’:
 Definitions are clear
 Definitions of the future are ‘fuzzy’
 No change in the business and technology
 Permanent and unpredictable change in the
environment
business and technology environment
 High time pressure
 Time to market and speed are major competitive factors
 Continuous learning
 Continuous learning & fast adaptation is required
E-BUSINESS VS TRADITIONAL BUSINESS
CONT’D
 UNIQUE FEATURES OF EC TECHNOLOGY
AND THEIR SIGNIFICANCE
1. UBIQUITOUS
 Available everywhere all the time , 365* 24*7
 Its unlike our market places
 It liberates a market from being restricted to a physical place and makes it
possible to shop from your desktop at work home or anywhere or using
mobile device e.g. Ecocash, mobile banking
 From a customer perspective it reduces transaction costs and cognitive
energy .
2. GLOBAL REACH
 Across cultural and or national boundaries
 The internet is cosmopolitan in nature meaning its market covers the
whole world rather than restricted by physical boundaries.
 Reach is the degree in which a firm can mange its value chain activities to
connect to its customers.
 Globalization – extension of markets .
 Brick and mortar vs. EC
 FEATURES CNT’D

3. UNIVERSAL STANDARDS
 The technical standards of the internet are shared by all nations of
the world and there is no need for substantial adaptation.
 Lowers market entry for merchants( costs to be paid to bring goods
and services to the market ) and search costs for customers(costs
required to find suitable products and services on the global market )
 Price discovery becomes simpler , fast and more accurate
 It reduces information asymmetry (limited exposure of infor about
products and services)
 It is also possible to locate suppliers of goods and services, enquire
prices ,and delivery terms of specific products anywhere in the world
and view them in a coherent and comparative environment.
 FEATURES CNT’D

4. INFORMATION RICHNESS
 Internet allows information to be shared in the form of text ,video ,
graphs among consumers though online communities and between
organisations and customers
 Provides a more powerful selling environment.
 Richness is the depth of or detail of information which is collected
about a customer and provided to the customer
 It also refer to product personalization.
5. INTERACTIVITY
 Can simulate face to face experience but on a global scale
 It allows 2 way communication between customers and business
eliminating the roles of intermediaries (Dis-intermediation )
 Skype, Facebook and IM platforms
 FEATURES CNT’D

6. PERSONALISATION AND CUSTOMISATION

 Personalization- target marketing , messages etc.
 Customization – product tailor made as per customer preferences.
 Use of profiles , profile reference ,and past experience
7. INCREASES INFORMATION DENSITY
 Amount and quality of information available to market participants .
 E BUSINESS COMPONENTS

1. Product information
2. Ordering Methods
3. Payment Methods
4. Shopping Cart
5. Guarantees
6. Privacy Policy
7. Security
 BENEFITS OF E-BUSINESS

 Increased hours of operation (a website provides 24 hour 7

day information to existing and potential customers)
 Reducing the cost of conducting business by lowering
transaction costs and increasing efficient methods for
 payment, such as using online banking and reducing
stationery and postage costs
 Increased speed and accuracy of information delivery
 Access to narrow markets
 Strengthened marketing capabilities and reach
 Access to broader information through research
 The opportunities to adopt new business models and develop
tailored customer support.
 BENEFITS TO ORGANIZATIONS

 Organizations can expand their markets to national and international

markets with minimum capital investment. An organization can
easily locate more customers, best suppliers and suitable business
partners across the globe.
 Helps organizations to reduce the cost to create process, distribute,
retrieve and manage the paper based information by digitizing the
information.
 Improves the brand image of the company.
 Helps organizations to provide better customer services.
 Simplifies business processes and makes them faster and efficient.
 Reduces paper work a lot.
 Increases the productivity of the organization. It supports "pull" type
supply management. In "pull" type supply management, a business
process starts when a request comes from a customer and it uses
just-in-time manufacturing way.
 BENEFITS TO CUSTOMERS

 24x7 support.
 Provides users with more options and quicker delivery of
products.
 Provides users with more options to compare and select the
cheaper and better option.
 A customer can put review comments about a product and can
see what others are buying or see the review comments of other
customers before making a final buy.
 Provides an option of virtual auctions.
 Readily available information. A customer can see the relevant
detailed information within seconds rather than waiting for days
or weeks.
 It increases competition among the organizations and as result
organizations provides substantial discounts to customers.
 BENEFITS TO THE SOCIETY

 Customers need not to travel to shop a product thus less

traffic on road and low air pollution.
 E-Commerce helps reducing cost of products so less affluent
people can also afford the products.
 E-Commerce has enabled access to services and products to
rural areas as well which are otherwise not available to them.
 E-Commerce helps government to deliver public services like
health care, education, social services at reduced cost and in
improved way.
 DISADVANTAGES OF E-BUSINESS

 Growing competition from other e-businesses

 Security issues
 Integration issues
 Software development industry is still evolving and keeps
changing rapidly
 Lack of touch or feel of products during online shopping
 Insufficient availability of telecommunication bandwidth
 User resistance
 Internet access is still not cheaper and is inconvenient to use
for many potential customers like one living in remote villages.
 Nature of products low value high weight, perishables ,
participative products ,
 Currency and language conversion
IMPACT OF E-BUSINESS ON TRADITIONAL
….
 It has created an economic environment in which time and
space are no longer limiting factors
 The business value of information is more important than
before and the information itself is more accessible
 Traditional business intermediaries are being replaced by new
business intermediaries
 An individual working from home can now advertise and sell
their product from home
 Price range becomes smaller because of competition
 Increased competitive advantage
 You can chose which shop has the best price from the comfort
of your home
 IMPACT OF E-BUSINESS….CONT’D

 Buyers are becoming more powerful because they can gather

information on the internet thus become more informed
 Reduction in physical boundaries and distance, thus
improving efficiency of how business is done
 It allows businesses to target larger customer bases more
effectively
 Consumers can now compare several shops which sell the
product that they want from their homes hence they do not
have to drive from shop to shop checking which one is better
 Companies can use e-business to order from suppliers, it
lowers inventories, reducing costs, and saving the consumers
money by lowering prices.
 BARRIERS TO EFFECTIVE E BUSINESS

 Operating in poor environmental infrastructure

 Poor or lack of understanding of the technology
 Fear to outsource to IT service company
 Fear of fraud and lack of confidentiality
 Fear of high costs and loses i.e. cost of access[h/w s/w and
connectivity ]
 Security
 Fear of unknown [technophobia]
 Cost benefit analysis [e- business adoption is risk in nature ]
 Lack of skills and training
 Cultural change [want to stick to old ways of doing business]
 Research more of the barriers
 SUCCESS DRIVERS FOR E-BUSINESS
ADOPTION
 Cost/efficiency drivers
 1 Increasing speed with which supplies can be obtained
 2 Increasing speed with which goods can be dispatched
 3 Reduced sales and purchasing costs
 4 Reduced operating costs.
 Competitiveness drivers
 5 Customer demand
 6 Improving the range and quality of services offered
 7 Avoiding losing market share to businesses already using e-
commerce
 Strategic direction and positioning
 Senior management champion
 DRIVERS CNT’D

 Strong and flexible IT infrastructure

 Outsourcing options
 Strong R&D
 DRIVERS FOR CONSUMER ADOPTION OF
E-BUSINESS
1. 1 C O N T E N T
 In the mid-1990s it was often said that ‘content is king’. Well, relevant rich content is still king.
This means more detailed, in-depth information to support the buying process for transactional
or relationship-building sites or branded experiences to encourage product usage.

2. C U S T O M I Z A T I O N
 In this case mass customization of content, whether received as web site pages or e-mail alerts,
and commonly known as ‘personalization’.
 Customers are allowed to define their entire shopping experience through personalization and
customization as they dialogue with online sales personnel.

3 COMMUNITY
 The Internet liberates consumers to discuss anything they wish through forums, chat-rooms and
blog comments.

4. CONVENIENCE
 This is the ability to select, purchase and in some cases use products from your desktop at any
time: the classic 24×7×365 availability of a service
 Customers have access to an endless array of products and services all from their comfort zones
 ADOPTION CNT’D

5. COST REDUCTION
 The Internet is widely perceived as a relatively low-cost place of purchase.
 Often customers expect to get a good deal online as they realize that
online traders have a lower cost-base as they have lower staff and
distribution costs than a retailer that runs a network of high-street stores
6.CHOICE
 The web gives a wider choice of products and suppliers than via
conventional distribution channels.
 The list array of products and services on the web provides greater choice.
7.Availability of products and services information.
8. Reduction of transaction costs i.e. search costs[ infor available about
products and sellers at a lower cost and convenient ] and Contracting
Cost[easy to negotiate ,compare and close the sale through payment ]
 ADOPTION CNT’D

8. Cost and price comparisons

9. Control through availability of information
 Information is power
 The web empowers the customer with information
 Customers though vast amounts of information can negotiate the
ideal marketing mix elements i.e. price, product, place, promotion ,
people , process and physical evidence
 DRIVERS TO ORGANISATIONAL
ADOPTION OF E-BUSINESS
1.Increasedcustomer demand through awareness [advertising
marketing etc.]
2. Business transformation through reduction in costs, increased
productivity ,high capacity utilisation and boosted firm’s growth
3.Prefereneceof a flat and decentralized organisational
structures due to cost reductions [less cost of doing business ]
4.Demand for customized products
5.Reduction in transaction time eg bank transfers ZIPIT ecocash
6. Better and quicker customer services through 24/7 availabily
of sales persons
7. Higher range of quality products and services offered
8. Availability of comparison shopping globally
 ADOPTION CNT’D

9. Increased delivery speeds of supplies

10. Cost reduction due to electronic means of delivery , staff cost,
transport and paper work , inventory holding costs, admin costs
etc.
11. Potential of increased revenue base as a result of global reach
12. Better customer and supplier relationship
13. Increased communication efficiency and interaction with
employees , vendors , customers and other strategic partners